Let's say I''ve been regularly selling on eBay as a reseller and been reporting this business on Sch C. If I decide to sell bunch of items that I have bought several years ago that were originally meant for a personal use, how should I account for their cost basis? They were originally bought for a personal use, so their cost of goods was never entered into Sch C. But Sch C. only seems to be able to enter cost of goods bought in the most recent year(2024). If I bought items back in 2015~2022 and sold for a profit, where can I enter the cost basis on Turbotax?
Thank you.
You would post it to 2024.
It was essentially gifted to the business in 2024.
Thank you for your reply, I just have few more questions if you could help me.
1. So it would just go under "cost of purchases" under 2024, right?
2. Since you mentioned that it was essentially a "gift," would I need to file some kind of gift tax form once the amount goes over $18,000 (which is the 2024 annual gift tax limit)?
Thank you.
1) Yes, add this amount to "Cost of Purchases" for the inventory calculation.
2) No, this is not a "gift" that must be reported. You are essentially providing the goods to your business for eventual sale.
Thank you for your reply. I just have one more question if you could help me clarify.
Would I include those items under "cost of purchases" for 2024 even if they did not actually sell in 2024?
Basically, should I add them in "cost of purchases"in the year that they were actually sold, or the year that I decided to move them from personal item to business merchandise?
Thank you!
If you are keeping an inventory, then you can report the cost of the items in the year that you decided to move them from personal to business merchandise. But, if you are not maintaining an inventory or you think you will change your mind about any of the items and decide to keep them for personal use, then it would be best to only report the cost in the year that the item is sold.